China Stocks Drop; Banks Report Profit Surge

Chandrasekhar Atreya
31 Aug, 2010
New York City

Stocks in China region fell after a report said personal incomes fell in the U.S. Profits of large and midsize steelmakers in China slumped in July. First half profits at Guangzhou Auto surged three-fold.

[R]5:00 PM Hong Kong, China – Stocks in China region fell after a report said personal incomes fell in the U.S. Profits of large and midsize steelmakers in China slumped in July. First half profits at Guangzhou Auto surged three-fold.[/R]

China stocks fell, with the benchmark index dropping for the first time in four days on report of a drop in personal incomes in the U.S. stoked investor concerns. Hong Kong stocks echoed mainland sentiments and dropped.

The Hang Seng Index in Hong Kong fell 0.97% or 200.73 to close at 20,536.49. The CSI 300 Index in China dropped 0.41% or 11.82 to close at 2,903.19.

First half net profit of 16 Chinese banks accounted for 46% of the total earnings of 1,829 mainland-listed firms, reflecting a booming banking industry that benefited from sustained credit growth.

Sixteen mainland-listed banks posted a combined net income of 343.4 billion yuan in the first half ended June, up more than 30% from a year earlier, according to their separate earning reports.

The big four state-owned lenders, Industrial & Commercial Bank of China, China Construction Bank, Bank of China and Agricultural Bank of China, together grossed 256 billion yuan in earnings, up 28.8% from a year earlier.

China started an anti-subsidy investigation into the imports of potato starch from the European Union, the first countervailing investigation against the EU, the Ministry of Commerce said Monday.

The Potato Starch Specialty Council under the China Starch Industry Association requested the investigation, according to a statement on the ministry’s Web site.

Shanghai Stock Exchange reprimanded Shanghai New Huangpu Real Estate Co for its failure to disclose its intention to take over a Shenzhen-based real estate company earlier in this year.

New Huangpu paid 280 million yuan as a deposit prior to taking over Shenzhen Guangyinhai Real Estate Co from its biggest shareholder Shanghai Xin Huawen Investment Co.

But New Huangpu did not disclose its intention to take over and did not observe the proper procedure for a shareholders meeting, the bourse said in a statement over the weekend.

The Japanese heavy machinery maker Sumitomo Heavy Industries Ltd said Monday it will spend an additional 10.6 billion yen to boost production capacity at two of its machinery plants in Hubei, China.

The company started production at these plants that makes hydraulic shovels and reduction gears in February 2009. But rapidly growing demand in China prompted the company to increase the capacity of these plants, Sumitomo said.

China’s large and midsize steelmakers made a total profit of 2.9 billion yuan in July, down 73.1% for the same month last year, according to data released by China Iron & Steel Association.

NEC Corp and Chinese IT service firm Neusoft Group Ltd announced a plan Tuesday to form a joint venture partnership in the cloud computing business in China. Around October, the two firms will establish a joint venture in Dalian, Liaoning Province, with a capital of 650 million yen, with NEC taking 70% stake through its local arm and the balance by Neusoft.

The Agricultural Bank of China said it will resume loans to property developers from Wednesday after stopping such lending for over a week. The bank suspended loans from August 24 to avoid excessive loan growth at the end of the month based on its own needs and since the move was a temporary one, it will be resumed tomorrow, said President Zhang Yun Tuesday in Hong Kong.

Ningbo, a port in Zhejiang Province, Monday secured $565 million worth of investment from Hong Kong in manufacturing, education, real estate and financial services.

These contracts were signed during the Ningbo-Hong Kong Economic Cooperation Forum, attended by more than 1,600 local participants and 250 business representatives from Hong Kong.

Guangzhou Automobile Group Co, a partner of Toyota Motor Corp and Honda Motor Co in China, more than tripled profit in the first half as sales surged.

Net income climbed to 2.31 billion yuan in the half year period ended June, from 640 million yuan a year earlier, with sales touching 28.9 billion yuan, the company reported in a statement to the Hong Kong Stock Exchange Tuesday.